- HMRC is sending letters to businesses suspected of being non-established taxable persons (NETPs) for UK VAT purposes.
- NETPs are required to obtain VAT registration in the UK regardless of their turnover levels.
- Online marketplaces are currently not deducting VAT on sales made by non-resident businesses to UK consumers, which HMRC believes gives them an unfair advantage over genuine UK registered businesses.
- To verify the UK establishment of these businesses, HMRC is requesting evidence such as rental agreements, utility bills, and records of staff.
- Mere incorporation in the UK is not sufficient to establish VAT purposes.
- Whether a company is established in the UK for VAT purposes affects various areas of VAT, including the place of supply of services rules.
- If a company has no presence in the UK and its registered address is that of a third party, it may be treated as an NETP for VAT purposes.
- This may create issues for the company, particularly regarding VAT recovery.
Source: saffery.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
